J.D. Power: Most Consumers Still Facing Financial Strain Despite Modest Improvement
By CU Today Staff —
TROY, Mich.--The financial health of U.S. consumers improved slightly in August, but nearly two-thirds remain financially vulnerable, overextended or stressed, while large numbers continue cutting spending to cope with affordability pressures, according to a new J.D. Power Banking and Payments Intelligence Report.
J.D. Power said the share of consumers classified as financially unhealthy declined three percentage points in August to 63%. Still, 68% said they had experienced a financial challenge during the past six months, including insufficient long-term savings (31%), little or no emergency savings (29%) and spending that exceeded income (24%).
Affordability remains a significant concern, with 43% saying their monthly expenses are less affordable than they were six months earlier. Three-quarters of consumers—76%—said they changed their day-to-day spending in August, including 42% who cut back on dining out and entertainment, 32% who switched to cheaper brands or stores and 27% who delayed discretionary purchases.
Some consumers reported more severe measures. J.D. Power found 25% had cut grocery spending or skipped meals, 17% borrowed from family or friends to cover expenses and 8% missed rent, mortgage or utility payments. Concern about utility costs also increased to 23%, even as worries about grocery and gasoline prices leveled off.
The report also found 15% of consumers have no financial plan and 13% said they lack sufficient financial knowledge. J.D. Power said the findings point to opportunities for financial institutions to help consumers prepare for expenses over the next six to 12 months. The report, authored by Jennifer White, managing director of financial services intelligence at J.D. Power, is based on responses from 4,000 U.S. consumers surveyed in August.
Originally reported by CU Today.